Need Advice on Paying a Home Daycare Assistant!!

Updated on September 02, 2011
J.S. asks from Cortland, IL
5 answers

So, as you probably already know, I run a home daycare. I just recently hired an assistant. She doesn't really have a preference between being paid by personal checks, tax free or by payroll checks, with taxes withheld. It's a small amount that she'll be earning. Right now at this exact point in time it will be $125/week. It is very party time, but definitely has the potential of going full time once she's here and we start outsourcing for more families. I would like your input....Personal, tax free payments or payroll checks with taxes withheld??? And, if I go the route of payroll checks, does anyone have advice on a program that is simple?? I will only need it to process payroll, though I'm sure I'll do more as the program allows.
Thanks so much for your advice!!!

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answers from Seattle on

If you pay your assistant more then $500 for the year, income taxes need to be claimed. I think the best route to go would be 1099 & let her pay her own taxes on her income when she files at the end of the year. You can use the money paid out as a business expense/ tax write off. It's cheaper to do this then to sign on employees, once you include L & I, S.S. & all other taxes. If you choose to sign on an employee, I would highly recommend, Quick books for pay roll, I have used it for all the businesses I have owned & operated, it's easy to use. Using the 1099 is like she is a sub-contract, this works good for you & her if you are not able to employ her full-time. There is no magic number that dictates whether she is employee of self employed.

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answers from Minneapolis on

QuickBooks is a good resource for a small business owner, I just got done taking a summer online class about it and it is pretty straight forward. I know that at some places when you buy the 2011 edition you get software to show you how to use it for free after rebate.

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answers from Minneapolis on

First of all...go to this blog and save it for all future daycare needs. Tom Copeland is THE man for all of your business advice. He is the man who goes to bat..and has for decades...for daycare providers. I am proud to say he started here in my home state of MN..but really he is THE authority on all business matters related to operating a home childcare. Some of these "small buiness" rules are very different for us, compared to other home based or small businesses. We have some areas with very very specific rules. The hiring of an assistant is one of those areas, and doing the payroll correctly, and what legally is considered an assitant. Its pretty concise that anyone who you are incontrol of while they are in your home, helping you (you control their hours, etc) you must treat as an employee and do all the appropriate taxes.

Here is the section aobut the hiring of employees

A person who comes into your home to help you care for children is considered your employee, not an independent contractor. It doesn't matter how little you pay the person or how few hours the person works for you.

There are two exceptions to this general rule. The first situation is a person who is self-employed in the business of providing substitute care for child care providers. Such a person should have a business name registered with your state and their own taxpayer identification number. She should work for more than one child care provider each year and use her own contract.

The second situation is when you hire a substitute through an employment agency and you pay the agency rather than the substitute.

Both of these exceptions are pretty rare. Anyone else that helps you care for children is your employee."

Like I said.."favorite" the site and use it for all of your business questions. Even email him..he really honeslty and turly replies. Even seen the books he writes? The Calendar Keeper? The Tax Workbook? The Contracts and Policy book? Anything of this nature thru Redleaf Press? Thats him!

Good luck making the right choices for your business!



answers from Oklahoma City on

If you were to hire her as contract labor that is only needed on call, some weeks she'll be there this many hours but others she won't be there at all, like Christmas break you can get by with just giving her her wages with no deductions. She would be legally responsible for paying her own taxes, you would still file the paperwork on her to show your expenses for your business.

As for me, I preferred to make it as "easy" as possible. I used the tax form and held the taxes out. I had such a hard time with making the transition form having the tax money in the account to the point it got paid in to them that I wish I hadn't. So, to me it is whatever you find to be easy.

I would, at this point, ask my CPA or make an appointment with one to ask the legalities of not paying her taxes for a part time employee.


answers from Kansas City on

Well besides the fact that tax free would be illegal, immoral, and wrong, it would cost you a lot of money. Why would you want to pay taxes on the full amount yourself and not get to deduct it as a legitimate business expense?

1099's are for self-employed people, like the cleaner that comes in. They choose their hours and THEY can send substitutes to do their jobs. They are contracted labor and maintain a lot of rights. If she is an employee, the payroll is the only way to go.

I haven't checked into a payroll company in awhile. But they are out there and I would find one that specializes in small businesses. You really are only allowed to call her self-employed if you keep her pay to less than 600 for the entire year.

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